Welcome to the Matinas BioPharma Second Quarter 2024 Financial Results Conference Call. Currently all participants are in a listen-only mode. Following management's prepared remarks, we will hold a Q&A session. As a reminder, this conference is being recorded. I would now like to turn the conference over to Jody Cain. Please go ahead.

This is Jody Cain with LHA. Thank you for participating in today's call. Joining me from Matinas BioPharma are Jerry Jabbour, Chief Executive Officer; and Keith Kucinski, Chief Financial Officer. Dr. Terri Matkovits, Chief Development Officer; and Dr. Terry Ferguson, Chief Medical Officer, will be available during the question-and-answer session. I'd like to remind listeners that remarks made during this call may state management's future intentions, hopes, beliefs, expectations or projections. These are forward-looking statements that involve risks and uncertainties, forward-looking statements made pursuant to the safe harbor provisions of federal securities laws. These forward-looking statements are based on current expectations, and actual results could differ materially. As a result, you should not place undue reliance on forward-looking statements. Some of the factors that could cause actual results to differ materially from those contemplated by such forward-looking statements are discussed in the periodic reports Matinas BioPharma files with the Securities and Exchange Commission. These documents are available in the Investors section of the company's website and on sec.gov. Furthermore, the content of this conference call contains information that is accurate only as of the date of the live broadcast, August 14, 2024. Matinas BioPharma undertakes no obligation to revise or update any statements to reflect events or circumstances, except as required by law. And now I'd like to turn the call over to Jerry Jabbour. Jerry?

Thank you, Jody. Good afternoon, everyone, and thank you for joining us. We're pleased to begin today's call by reporting that we have signed a non-binding term sheet for the licensing of global rights to develop, manufacture and commercialize MAT2203. Our ongoing constructive dialogues to partner this oral formulation of the potent yet toxic antifungal amphotericin B cover not only the initial indication of patients with invasive aspergillosis with limited or no treatment options, but potentially all future treatment indications. We believe we have identified the right partner to maximize MAT2203's value in multiple territories. Our discussions have been quite productive and have covered a wide range of topics from development strategy and commercial manufacturing to regulatory and commercial positioning. We must state that this is a non-binding term sheet, and there is no guarantee that it will result in a definitive agreement, but we are very encouraged by this progress. Partnering this life-changing asset has been our top priority, and we've now taken a significant step forward in that process. We are confident that we are on a path to placing this asset in highly capable hands, which is in the best interest of our company and our shareholders. Preparations are ongoing to enable the ORALTO Phase 3 registration trial with MAT2203 to initiate as soon as possible following the consummation of a partnership agreement. In the meantime, we continue to build real-world clinical evidence supporting MAT2203 in a variety of challenging and life-threatening fungal infections through our Compassionate/Expanded Use Access Program. In this program, MAT2203 has continuously demonstrated its potential to achieve positive clinical outcomes even in critically ill patients and to do so safely. Since our last public update on June 24, seven additional patients ranging in age from 15 to 71 have gained access to oral MAT2203 through this program. This brings total enrollment to 31, with an additional six patients currently under evaluation. These latest patients were afflicted with a variety of serious and life-threatening invasive fungal infections. To date, 15 patients in the Compassionate/Expanded Use Access Program have completed a full course of treatment with MAT2203. The median treatment time was 16 weeks with a range of 2 to 49 weeks. Of these 15 patients, eight had a complete response and the other seven were dramatically improved. Response to treatment for all patients was assessed by the treating physician. Nine additional patients are continuing to receive longer-term treatment with positive ongoing effects, and five have just recently initiated treatment. As of now, only two patients have discontinued MAT2203 under this program, both during the first week. One discontinued due to intolerance secondary to underlying and unrelated GI conditions; and the other due to a terminal condition unrelated to their fungal infection. Notably, seven patients with invasive aspergillosis have been or are being treated, and all of them have shown positive clinical results. The positive outcomes in this program highlight the significant value of MAT2203 and bolster our confidence in the success of the ORALTO Phase 3 trial. Given MAT2203's consistently positive clinical impact and highly favorable safety profile in patients with a variety of deadly invasive fungal infections, we are experiencing a dramatic increase in requests by physicians seeking access for their patients. Turning now to updates with our LNC platform. Recent studies have increased our understanding of its potential in delivering both small oligonucleotides and small molecule oncology drugs. This includes LNC cellular uptake and cargo delivery. We also continue to build our knowledge base with this technology in the areas of oncology and inflammation. We believe that there are significant unmet needs and the potential opportunity for the LNC mechanism of action to play a meaningful role in combination with effective treatments plagued by inefficient or non-specific delivery and/or significant safety and toxicity concerns. Regarding our LNC formulation of the widely used chemotherapeutic agent, docetaxel, following the success in melanoma that we've discussed on past calls, recent studies in animal models of breast, prostate and lung cancer have all demonstrated varying degrees of tumor growth inhibition with daily oral dosing of LNC-docetaxel. We have also expanded our in vivo studies to include daily oral LNC-docetaxel in combination with IV-docetaxel. These studies have demonstrated an even greater degree of tumor inhibition, but also resulted in added weight loss. We are continuing to evaluate several strategies intended to further improve the therapeutic index of this widely used chemotherapeutic agent. We have also begun evaluating the capabilities of our LNC platform with other chemotherapeutic agents. In vitro testing of an LNC formulation of miriplatin, which is a highly toxic agent only approved outside the U.S. for intra-arterial use, demonstrated strong cellular uptake in tumor cell-killing capabilities. More recent in vivo testing indicated that while the oral LNC formulation of miriplatin was very effective in inhibiting tumor growth, it was also associated with weight loss, especially at higher doses, which may relate to the overall toxicity of the agent itself. We continue to evaluate the potential causes of this weight loss. In today's update announcement, we also highlighted a recently completed series of in vitro studies that investigated the potential relationship between the expression of surface phosphatidylserine or PS and the extent of LNC uptake into certain tumor cells. We previously observed a relationship between tumor cell surface PS and our LNC platform in preferential tumor targeting. Based upon these studies, surface PS expression appears to be one, but not the only driving factor for cellular uptake. Additional work is ongoing to better understand and predict the efficacy of LNC-delivered chemotherapeutics. Finally, in reviewing our parallel work in inflammation, following encouraging in vivo data demonstrating the successful oral delivery, biological activity and potential therapeutic efficacy of two different LNC formulated small oligonucleotides targeting the inflammatory cytokines IL-17A and TNF-alpha, the findings from more recent follow-up in vivo studies have been less consistent. As such, additional optimization is required prior to identifying a potential product candidate. Overall, we believe good progress has been made in better understanding the potential for the LNC platform, but there is significant time and additional work ahead for us to be able to identify additional potential product candidates. We expect to be in a better position to provide additional guidance following the consummation of a MAT2203 partnership.

Thank you, Jerry. And good afternoon. Today, the company reported its financial results for the second quarter of 2024, which reflected a net loss of $5.7 million, or $0.02 per share. This compares to a net loss of $6.1 million, or $0.03 per share, for the second quarter of 2023. The company did not report any revenue during either of these periods. Total costs and expenses for the second quarter of 2024 were $5.8 million, compared with $6.2 million for the second quarter of 2023. The year-over-year decrease was primarily due to lower clinical development expenses, personnel costs and administrative expenses. Turning to our six-month results, our net loss for the six months of 2024 was $11.5 million, or $0.05 per share, compared with a net loss for the first six months of 2023 of $11.6 million, also $0.05 per share. We reported no revenue for the six months ended June 30, 2024. This compares with $1.1 million in revenue for the prior year period, which was generated from research collaborations with BioNTech and Genentech. Total cost and expenses for the first six months of 2024 were $11.7 million, compared with $12.8 million for the first six months of 2023. This decrease primarily reflects a decline in R&D expenses, as well as lower general and administrative expenses. Cash, cash equivalents and marketable securities as of June 30, 2024, were $14.3 million, compared with $13.8 million as of December 31, 2023. This increase reflects $10 million in gross proceeds raised through a registered direct offering in April, more than offsetting the company's negative cash flow from operations over the six-month period.

Thanks, Keith. In closing, we are reporting positive real progress in consummating a partnership transaction with MAT2203 that we believe will be in the best interest of our company and bring value to our shareholders. We have signed a non-binding term sheet with a potential global partner and remain engaged in ongoing constructive discussions with our prospective licensee with the goal of finalizing this transaction as soon as possible. Our Compassionate/Expanded Use Access Program continues to highlight the ability of MAT2203 to safely target and effectively eradicate a variety of severe, potentially deadly invasive fungal infections, even in the most challenging clinical circumstances. This program is gaining awareness within the medical community, with requests for access to MAT2203 significantly increasing in recent months. In fact, just yesterday we received two additional requests; bringing us close to 40 total enrollees should all current evaluations result in patient admittance and emergency IND approvals. This essential program is functioning like a basket study of invasive fungal infections and could position us and/or our partner for the support of potential expanded label discussions at the time of NDA filing. We continue to expand our knowledge base with our LNC platform. We're evaluating the best next steps for this technology as we determine how to maximize return to shareholders and look forward to providing additional guidance on next steps once we have secured our MAT2203 partnership, which remains the key focus of the company. With that review, I will turn the call over to the operator for Q&A. Morgan?

Your first question comes from Scott Henry with Alliance Global Partners. Your line is open.

Thank you and good afternoon. Just a couple of quick questions. First, good news on the non-binding term sheet. Obviously, you can’t give out specifics, but generally speaking, should we be thinking about an upfront payment and as well reimbursement for the ORALTO trials? Are those kind of key components of what you’re looking for in this type of deal through this agreement or another one?

Hi, Scott. Thanks for the question. Actually, without commenting on it specifically, I do think it’s appropriate to say that we would expect not just the non-binding term sheet but a definitive agreement to be structured similar to what you would typically see and have seen in this area with some combination of an upfront payment, certainly development and commercial milestones, royalties and the additional potential elements of how you’re going to treat clinical development costs and manufacturing, which we have outlined for investors before, specifically referencing our intended tech transfer of manufacture from here at Matinas to Thermo Fisher. So there are a lot of moving parts there, but I think as investors try to get their arms around what is the meaning of a non-binding term sheet, it’s just that. It’s the framework for a deal, but all of those elements have been discussed. I think it’s safe to say that any definitive agreement that we arrive at with this intended partner on a global basis would include some combination of those essential elements.

Okay. Thank you for that color. And then given the timeline for a partnership, it’s taking a little longer than expected. Would you still expect the ORALTO trial to start in fourth quarter of 2024 or perhaps we should think about early 2025?

Yes. It’s a fair question. I think it’s appropriate for us to address that this has taken, I think, longer than any of us had expected. This speaks to the complexity of these sorts of dialogues, but it also underscores how important it is to have a complete alignment across the board and no surprises. In this category in the recent past, you had a global big pharma that was surprised by CMC issues, which arose after a definitive agreement was signed. This has caused everyone in this category to ensure that all of those boxes are checked. So the diligence process around this transaction has been pretty thorough. I believe that this explains the passage of time as much as anything else, and why it’s taken a little bit longer. It eliminates surprises post a partnership announcement and puts you in a position to get things started as quickly as possible once a transaction is consummated. In terms of timing, we’re not sitting on our laurels. The team here is actively working with a global CRO to sort of put pieces in place. It’s a sliding scale regarding product readiness. When preparing to start a Phase 3 trial, there are a number of steps that need to be approved before you can have first patient first dose. But we do think we can initiate the study in the fourth quarter of this year, though it may be safer to consider the first patient first visit in 2025. Nonetheless, we’re proactively addressing that issue to ensure that we’re putting ourselves in a position to initiate the trial or our partner to initiate it as soon as we can.

Okay. Great. Final question. With regards to the LNC platform in the oncology indications, how should we interpret the additional weight loss we’re seeing? Obviously, typically a good thing, but less so on an oncology trial. Would you think that is molecule-related? Or would you think it’s a lack of thriving? Just curious; I saw it in there a couple of times how you would interpret that.

Yes. Scott, it’s a great question. This is the interesting and challenging part of early-stage drug development. While we’re trying to drive and show biological activity and therapeutic efficacy, particularly for LNC-docetaxel, some of what we’re doing is using very high doses. This can explain some of the weight loss. Remember, though, this is an oral therapy traditionally given IV. In oral therapy, you can have issues like feeding problems in animal studies, which could be affecting how these animals eat and contributing to weight loss. In terms of miriplatin, we’re dealing with a highly toxic agent. We would attribute more of the weight loss observed to the toxicity of miriplatin, but we’re doing additional work to verify that. Our objective is to encapsulate whatever chemotherapeutic agent we're targeting in a way that we can create oral availability while ensuring specific tumor targeting and lower toxicity. Given that we’re in these early stages, it’s not surprising that sometimes we see weight loss. However, we're working hard to understand these effects and believe that, especially in the case of miriplatin, it is agent-specific and not related to the platform.

Okay. Great. Thank you for taking the question.

Scott, thanks very much.

Your next question comes from Jason McCarthy with Maxim Group. Your line is open.

Hi. This is Joanne Lee on the call for Jason McCarthy. Thanks for taking the question and congratulations on securing the partnership for ORALTO. My question on the anticipated time line for the Phase 3 launch was answered. But just as a follow-up, with the recent milestone achieved, could you just remind us on some of the key design elements and objective measures of the upcoming non-inferiority study?

Sure. Joanne, thank you very much for the question. I'm going to turn it over to Dr. Matkovits to talk about the design, but I would say we're really proud of our progress. I wouldn't quite say milestone achieved yet. We do not have a definitive agreement yet. Obviously, we're working hard to deliver that as soon as we can; that's when we'll celebrate. However, this is an important progress toward that milestone, narrowing it down to a single party and working with them to ensure that all of those questions are addressed and the program is set up for success as soon as we pass that baton. We don't want to have any missteps. So, Terri, could you remind everyone what that design element of the ORALTO study looks like, including the number of patients, what we're going against, and the key primary and secondary end points?

Thanks, Joanne, for the question. To remind everyone, the ORALTO trial is a non-inferiority trial, a two-arm trial, targeting the efficacy of MAT2203 after a two-day IV ampho step down to MAT2203, with treatment out to 12 weeks. This trial will focus on patients with invasive aspergillosis who have no other treatment options. The comparator arm will be where patients receive IV liposomal amphotericin for as long as they can tolerate it, with the primary endpoint of mortality at six weeks. We have also added key secondary endpoints because we believe a key attribute of MAT2203 is the ability to receive the drug longer without the safety sequelae seen with IV-administered ampho. One key secondary endpoint will be safety, focusing on the proportion of patients who must switch from IV amphotericin in the comparator arm to another regimen. We will also be closely monitoring global response to treatment, including clinical, radiological and mycological responses at 12 weeks. Additionally, we'll evaluate the pharmacoeconomic impact of the oral MAT2203 because its value proposition, along with the safety benefit, is the ability to transition patients early to home care where they have lower healthcare resource utilization and a higher quality of life. The ongoing compassionate use program demonstrates that patients are quickly transitioning to home care after switching from IV amphotericin. We're also evaluating mortality throughout the course of the study until the 12-week endpoint.

Great. Appreciate all those details. Looking forward to more updates on the program. Thank you.

Thank you.

Thanks Joanne.

At this time there are no further questions in queue. I'd like to turn the call back over to Jerry Jabbour for any further remarks.

Thanks, Morgan, and thank you for joining us today and for your interest in Matinas. We remain excited and very optimistic about our company's future and look forward to reporting further progress during our third quarter conference call in November. Thank you again, and have a nice evening.

This concludes the Matinas BioPharma Second Quarter 2024 Conference Call. Thank you for attending, and have a wonderful rest of your day.